‘Tis the season: Your clients could easily obtain several hundred dollars’ worth of gift cards after a birthday, graduation or wedding—but especially during the holidays.

Q: Is there any coverage under the homeowners policy if gift cards are lost or stolen? 

A: Both the 2011 and 2000 editions of the ISO HO policy treat gift cards the same as cash, providing just $200 in the aggregate—meaning that's the total amount of coverage for all items in that category, no matter how many gift cards are involved. In addition, because the perils that apply to Coverage C are named perils only, lost gift cards would not be covered at all, unless the insured has the HO 00 05.

Note too that while cash and every other type of property in that category is subject to the Section I deductible, the deductible is subtracted from the loss to covered property—never to an internal limit, such as the $200 cash limit. For example, if the insured suffers a covered loss to $1,000 worth of gift cards, a $500 HO deductible would be subtracted from the $1,000 loss, and payment would then be subject to the $200 limitation. While gift cards have been around for several years, it wasn't until the 2000 edition of the HO policy that ISO included language addressing coverage.

Both the 2011 and 2000 editions refer to gift cards as "stored value cards," not "gift cards." The relevant excerpt from the 2011 and 2000 editions of the HO 00 03 reads as follows:

C. Coverage C – Personal Property

3. Special Limits Of Liability

The special limit for each category shown below is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability.

a. $200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards.

Under ISO rules, the $200 limit on cash and similar items of property, including stored value cards, can be increased up to $1,000 in the HO-3, using endorsement HO 04 65 Coverage C Increased Special Limits of Liability. With the HO-5, use the HO 04 66 endorsement. 

You might also consider checking with your individual markets to see if they offer additional coverage.

The previous 1991 edition prompted some confusion between coverage for gift cards versus credit cards, which were covered for $500 with no deductible. While most authorities assumed the policy would treat gift cards as cash, the policy did not specifically mention gift cards.

Chris Boggs is executive director of the Big “I” Virtual University (VU).

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.